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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: jttmab who wrote (3927)	8/21/1999 12:44:00 PM
From: Lizzie Tudor	Read Replies (3) \| Respond to of 769670

One situation is the idiot that invests their retirement in ...internet stocks or their equivalent and loses their retirement. We could say, too bad that's their problem. I suspect that the first picture of an old homeless person who has lost everything, will cause us to find government funding. Is this significant? Don't know. Do we plan for it in the operating fund and for how much? Second contingency, we know that the market goes up and down and in the future while the trend is up, it will have it's corrections and crashes. But their is a continuous stream of retirees. Yes these details (which are fairly major) get into why this matter is so difficult to discuss for me... you start touching on all these other matters, it gets very sticky. First of all, I have said that I have an issue with the entire premise of Social Security and Medicare. It assumes that the elderly - well those over 65 which is a fairly young cutoff these days - are somehow more likely to need financial assisstance and I think that assumption is flawed from the start. However if you accept the case that Social Security must exist, then it must be self-supporting and secure, which assumes market underperformance. There really isn't much that can be done to change that - I agree with your points above. If SS was self-directed we would still need to support those that lost it all. I don't much care for the self directed SS options for this reason (although I can see the point that "its your money"). One happy medium might be to invest 25% of the SS trust fund in mkt indexes or something... of course some risk analysis would need to be done... however in this day of stops and options it seems worthwhile. So, that could increase the return a little. But back to my real problem which is that Fica is a tax, on the lower income earners that guarantees underperformance. One way to correct this is, 1) Lower the fica rate - 12% now, way too high, and 2) Tax all income, no limits, including capital gains with this fica tax. Payouts would need to be altered dramatically because you'd have people like Bill Gates paying into the system (as he should). But this would eliminate the solvency question right away. Maybe the rates could get down to 5% or so for those 70K and under earners, a more reasonable figure, and wealthy investors would have to pay too - day traders and the like - that seems only fair. Of course you'd get a lot of crying from the million$/year income crowd that would have to pay out 5% for an underperforming retirement plan, but perhaps if this burden was imposed more equally there would be an incentive to fix it in an equitable fashion vs. how Reagan "fixed it" last time by raising rates and overtaxing the young.